Resources for Buying and Selling Online Businesses

Incredible Acquisitions: The Beard King (Part Two) With Raj Patel

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In the world of e-commerce acquisitions, it is always beneficial to explore a transaction from both the seller and the buyer side. In today’s Beard King follow-up episode we bring you part two, the buyer. Raj Patel is a law school dropout who has been an entrepreneur for several years. He started to build Amazon businesses while studying full time. Being and entrepreneur and making more money as a student than he would have if he had followed his original career path led Raj to abandon law for e-commerce. Raj looked at over 35 businesses before pulling the trigger on Beard King, his first sizable acquisition. He is here to give insight into his search criteria, the buying process, and some of the ideas he has to grow his newly acquired business. If you missed Part 1, you can listen to it here.

Episode Highlights:

  • Raj’s background and how he found success in e-commerce.
  • Why he began moving towards acquiring rather than bootstrapping.
  • The new Amazon third party platform and any impact Raj fears for his businesses.
  • The number of businesses he looked and how the search process played out.
  • Whether any of the other deals explored in-depth came to offers.
  • Why direct calls and face to face time between buyers and sellers is important.
  • Aspects of the Beard King business that attracted Raj despite trends and competition.
  • Raj’s retrospective view on what was done right and what lessons he can share from the acquisition.
  • How he boosted his bottom line quickly.
  • What he’s now doing to boost the topline.
  • The foreign markets Beard King is focusing on and how Raj chose them.
  • The sources of Raj’s experience, how he learns, and how he weeds out useless information.
  • How he interacts with other entrepreneurs on a regular basis to avoid loneliness.
  • How many hours Rajputs into the new business each week.


Mark: Hey, recently Joe I know that you had Nick from the Beard King on the podcast to talk about selling the Beard King. And today we have part two. You have Raj on who bought the Beard King.

Joe: Yeah it’s a great follow up. The first one we get to see it from the seller’s perspective and then we get to see it from the buyer’s perspective. And Raj is pretty impressive. He is a young guy. He’s in his mid-20s, a law school dropout that became an entrepreneur. He was going to law school and building Amazon businesses along the way and realized that there was just no way he was going to make as much money in law school with the demands of law school and life in general afterwards as he is as an entrepreneur. And this is the first sizable one that he’s purchased and he goes through the process of the hunt for finding the right business, some of the criteria he was looking for, and some of the changes he’s going to make to the Beard King to help grow it over the next 12 to 24 months.

Mark: Yeah you told me before that he had been looking for quite a while for a business and he looked at was it like 30 or 40 different businesses before he pulled the trigger on this one?

Joe: Yeah, exactly. He’d made a couple of offers on other ones that we had listed, it just wasn’t in the right place at the right time in order to make it happen. So this one I think is going to work out great. AAs the audience knows that listened to the first one there’s a lot of IP around this one with utility patents, design patents, and it’s a big reason why Raj jumped on this very quickly.

Mark: Very good. Let’s get right to it. 

Joe: Let’s go. 

Joe: Hey folks Joe Valley here from Quiet Light Brokerage and the Quiet Light Podcast. Today I have Raj Patel on the line with me. He bought the Beard King. We had Nick on the podcast last week talking about his exit as a seller and today we’ve got the buyer. Raj, welcome to the Quiet Light Podcast.

Raj: Thanks for having me, Joe. How are you?

Joe: I’m good man. But where’s the beard? I mean we chatted last week there was a little bit of stubble I was expecting a big bushy beard today; what’s going on?

Raj: Unfortunately I am not the Beard King. I can’t grow a great beard but I do know business though. That’s my thing. 

Joe: You do know business that’s for sure and at a young age; we’re going to get into that a little bit as well. Why don’t you tell everybody listening who you are, what you’re all about, what your background is?

Raj: Yeah pretty much my name is Raj Patel and I’ve been doing about e-commerce; it’s my 5th year in I would say. And I primarily do Amazon FBA but we do some; I do own a couple of sites as well that we do direct to website sales as well like Shopify and those platforms. But yeah primarily we’re doing; about 80% percent of my revenue is coming through Amazon FBA right now and riding this wave of how well e-commerce is really doing and this market is just exploding right now.

Joe: And if I recall from our conversations you’re 25 years old and were on the path to becoming attorney and said I can’t do that, I’m not going to make enough money. I want to be independent, I want to be an entrepreneur and live this life. Is that right?

Raj: Right. That’s pretty much true. Yeah. Well, I just turned 26. But it was one of those things where I was making more money while I was in school than I would probably make with a job after I graduate. So I was kind of one of those things that didn’t quite make any sense for me to continue that path and I was enjoying what I was doing I got to travel. I’m still traveling all the time and I’m kind of reaping the perks and just growing businesses.

Joe: How many have you purchased; was Beard King the first actual purchase or were the other 2 or 3 that you might own are purchases as well or did you develop those from scratch?

Raj: So I developed 2 from scratch and those are the ones I started with about 4 or 5 years ago when I was experimenting and I still have those 2 today. And I purchased another and then Beard King would be my second purchase. 

Joe: I got you.

Raj: I moved away really now from starting my own businesses because I’ve accumulated the capital so I’m moving more towards acquisitions and finding the right fit and brand and adding my spin to it and sort of the knowledge that gained in the last 5 years in defying that 3 businesses.

Joe: That’s interesting you know we’ve had Walker on a podcast, he wrote Buy Than Build and then Amanda Rob another advisor here at Quiet Light took another approach which is bootstrap, build, and then sell. You’ve bootstrapped and built too but you’re now because you have the capital buying. Do you find it’s easier to get ahead when you’re buying something because there’s revenue that’s already being produced or is there; what’s the sort of logic between buying now versus taking the time to build?

Raj: Right and to me, it’s kind of a timeline thing. I’ve always been sort of aggressive in terms of expanding and it’s to a point where if I start my own Amazon business, I’m looking at a year or 2 out before I can really see the return on my money in terms of the marketing, getting trademarks, getting brand registry, doing a whole bunch of things; graphics, creative, getting all that stuff together as well as building the supply chain in China or wherever you’re supplying from and it’s really a time thing. I know the work that I put into my first 2 businesses and the timeline it took me to get to where it’s at now which was it took quite a bit of time and a lot of work while I was obviously doing other things. And now that I have the capital I’m able to skip those 1 to 2 years of just hard work; not hard work but that sort of figuring things out period and get right into the top where I’m already getting a cash flow positive business that I can just keep adding to it really.

Joe: Yeah. And if you hadn’t started those other businesses you wouldn’t have been able to buy the Beard Kind. You wouldn’t have gotten capital. So there’s no perfect process or method for everyone. You’ve got to take your own path. It sounds like you took one that definitely worked for you and now you’re evolving into a buyer instead of a builder.

Raj: And I would say for anybody who’s looking to get into it you know it always helps to know kind of what you’re doing too. If you have a little experience that’s going to help but that learning curve won’t be as drastic. So kind of what I know and now that I’m able to pick these businesses I kind of have these 5 years under my belt I can figure out what I generally want and how I can improve the businesses that are out there. So I feel confident purchasing.

Joe: So let me grill you with a bunch of questions as a buyer given that you’ve just gone through the process and on this one in particular. It’s mostly an Amazon business at this point it started off non-Amazon, right? Shark Tank, Shopify, things of that nature and now it’s mostly an Amazon. As a buyer, as an entrepreneur, how much do you fear the Amazon third party platform and things changing there and having an impact to your business?

Raj: Yeah I think that’s a pretty big concern for everybody because they’re thinking oh well I only have one source of revenue but the truth is if you expand to a whole bunch of different markets on Amazon you’re having kind of multiple streams of income. It’s not just you had to stick to the US and that’s it. People always forget that there is a lot of people in the world and expanding; it’s not like you’re putting all your eggs in one basket. And the way e-commerce is kind of going is Amazon is kind of just out there killing everybody right now. So it seems like though you have to follow this path and if you continue trending upwards Amazon looks like it’s the way to go right now.

Joe: So you’re comfortable with the risk on Amazon and you don’t think it’s going away.

Raj: I don’t think so, no. I still think it’s relatively new and the idea that a couple of years ago you can never build a business like this out of nowhere. First, it was always you take it to retail, you build the supply chain and you’re talking 2 to 3 years of just negotiation and relationships and now you can build an entire platform, a business in like a matter of 2 to 3 months which is crazy to think. 

Joe: Yeah.

Raj: Things change over time and you kind of have to go with the flow and that’s what; this is where it’s at. Most of these businesses; Amazon’s made it so it’s automated for you and you can run these businesses and pretty much just continue to grow it. And whether it be on Amazon’s platform or somebody else’s or it changes over time you just have to be willing to change with that too.

Joe: And when you were on the hunt for a business to buy were you specifically looking for something that was Amazon based or were you looking for anything that was e-commerce physical products and you didn’t care what they were selling.

Raj: No I did like the Amazon platform just because they allowed me to; I do a lot of other things during the day as well and the one thing about the FBA platform is you can really optimize everything that I don’t have to put in 30, 40 hours a week. I can kind of put it on autopilot and set it. But the other main thing was ad spend is getting kind of crazy in terms of running Facebook ads and Google ads and all that stuff. It’s kind of getting really expensive and I’ve been noticing the last 1 or 2 years with the drop-shipping model that really pushed up the cost for acquisitions for these and getting clicks. So I was kind of trying to stay away from that because that was something I couldn’t really control. I couldn’t really control how much I’m going to spend on ads with Facebook and all that but I could kind of control my supply chain and have a relatively good idea of what my margins would be on Amazon.

Joe: I got you. Okay, just out of curiosity how many businesses in total did you look at in the process of finding this one? Talk to us about that process because some people say they’ve been looking for a long time but they never actually looked at a full package or they’ve made 9 offers they must be doing something wrong. What was your process? How long you have you been looking and what was your process?

Raj: I would say I was looking for a solid 4 to 5 months I would say and I was looking pretty aggressively. Every day I would look at at least any; I was subscribed to every single email list out there whether it be Quiet Light or whatever other brokerage; everything and I contact; I don’t just subscribe to a contact list. I’ve talked to all the brokers and I would look through all the memorandums and all the offering material. I look through from top to bottom because to me I was always learning something in those. It didn’t seem like it was a waste of time for me to read an offering material. You kind of learn how people worked their businesses and you can really gain a lot of knowledge just from reading those as well. So it was never like I didn’t; I just skimmed them, I read all them and you could see on my; I don’t know within half an hour I’d probably have signed up or whatever new businesses out there and getting their offering memorandum. So I would say 4 to 5 months of just aggressively looking for the right fit.

Joe: And in that 4 to 5 month period how many; rough estimate how many listings did you look at in detail where you’ve looked at the full package?

Raj: I would say probably more than 40.

Joe: Wow.

Raj: I’d say 35 to 40. And some of those weren’t exactly Amazon FBA because not that many FBA businesses are available as you would think in the market that fast. I mean when I was looking I wouldn’t see more than I don’t know and in a month maybe 3 or 4 new businesses would pop up that was something different or something that fit my criteria really.

Joe: Okay, and of the 35 to 40 that you’ve looked at how many offers did you make?

Raj: 3 to 4 offers I would say I have made on businesses.

Joe: Did you two go under LOI on any other businesses and have it fall apart in due diligence or did your offers not get accepted until the Beard King?

Raj: Yeah I did actually do one LOI; no actually what happened was I missed it by a day. Another buyer came in and signed the LOI before I signed it and I literally missed it by one day. I flew in in the morning but my offer was late willingly.

Joe: Well how do you; in that regard you said that when you look at these packages you have conversations, with all the brokers that you’d have conversations, it sounds like you’re building a relationship with them, do you find that building that relationship with a broker advisor that is representing that client helps if you’re making a lower offer or justify some sort of offer or did you that no matter what if you made a lowball offer whatever that lowball is that it was received with displeasure and animosity from the broker and the seller?

Raj: Right. I would always try to talk to the broker because when you send a lowball offer by email it doesn’t seem genuine. I mean lowball offers aren’t too genuine anyway. But when I talked to a broker I can sort of tell them this is what I’m thinking this is what the business needs this is what’s missing kind of justify why I’m shooting them that offer and it’s the starting point for me. It’s to get the conversation going. If I see that there’s some room to work here it kind of gets me more excited to say okay maybe we can get to the number I have in mind. That’s not the number I want but I can meet you somewhere in between just to know that you’re able to work. Some sellers will be stuck on a price or as we’ve seen many times too I know we talked about business before that just shot through the roof and they’re asking this they went over asking so I kind of can gauge where the audience is slash what the seller is really thinking.

Joe: Yeah, so I think you’ve gone through the process with me twice because I think you made an offer from one of my listings that had 10 offers if I recall. And I don’t recall specifically on that one or not did we do; with the interview with the seller did we do the video call?

Raj: We did a video.

Joe: We did a video call. Did we do that with Nick or was it just audio?

Raj: Just audio with Nick as well. 

Joe: Okay. So we’re doing video now. One of the things that we’ve done and moved to as often as possible when it’s feasible is on that first buyer call; buyer-seller call we will pop on the video as long as everybody’s comfortable with it. I felt that it makes a tremendous difference in terms of connecting. You’re in one part of the world, the seller’s in the other part of the world and you can bridge that gap. And I’ve been in situations that I’m sure you’ve heard this or seen it before where being likable kind of makes a bit of a difference in business especially when you’re in other parts of the world.

Raj: I think one thing I’ve really noticed is a lot of people with their business that they’re selling this is kind of their baby, right? This is something that they’ve been working on for years and to see somebody that maybe is just looking straight at the bottom line and just wants to buy it and just do whatever they want, seller’s don’t like that. And they might take a lower offer from somebody who seems genuine in their intentions to grow the business and they have a passion for that business. And definitely, that face to face helps with that. That’s for sure.

Joe: Yeah. So this particular business it had plenty of interested parties. You kind of stepped up and got the ball rolling with Nick and went under a letter of intent. It’s got what? Two utility patents, two design patents, multiple copyrights. I haven’t seen a whole lot of businesses like that in my 7 years of advising with Quiet Light. The drawback or the downfall of this particular business I think was the trends. I think you’ve got a heck of a value given all of the IP protection that it has, the way that the revenue took off right before closing you almost ran out of inventory because things took off because of the Amazon patent protection program. In your searches were you specifically looking for something with this kind of IP or were you just looking for something with great trends that you thought you could handle and take over?

Raj: Yeah. So I was looking for something that had some kind of; something that was proprietary about it and IP is always great because another way to collect and another source of revenue is to enforce the IP and it kind of takes away these competitors. And the one thing I was seeing with business was there were a lot of competitors at the time if you recall and the IP had just gone through. So it’s one of these things where I kind of was excited to get in there and start taking off these competitors. And as you saw right before a whole bunch of the competitors got knocked off the platform and the sales they shot through the roof. So that got me even more excited to say well this is just the beginning, right?

Joe: Yeah. If I recall we had a conversation and it was there’s a possibility he might run out of revenue; out of inventory.

Raj: Actually he did run out of inventory.

Joe: Prior to closing?

Raj: Prior to closing we went about 2 to 3 days; nothing is in it there but 2 to 3 days. 

Joe: But we waited to close. The goal was to no matter what we were going to close after inventory is in stock.

Raj: Exactly, yeah. 

Joe: Talk to me about your review now that you’ve had the business for 3 or 4 months. Looking back you’ve looked at 40 different businesses, a lot of different brands, what was done right with this business and what lesson can you share that maybe was done wrong in terms of this particular business? And I don’t want you to throw Nick under the bus. I think he did an amazing job with the brand.

Raj: Yeah, 100%. I think that Nick has done an amazing job to start off with the marketing side. 

Joe: Yeah. 

Raj: What Nick has built-in terms of marketing and he has a real keen eye for how to put that vision out there and represent the product in a way that it’s appealing to everyone. Also, he invented the idea too which is something that we don’t really think of too much, right?

Joe: We all come up with great ideas. He actually followed through and got it done.

Raj: Right. Yeah, he came up with the idea and then he made such a great marketing plan and if you look at how well the website is made, how well the quality of the product is, everything is impeccable that he’s done. I think that was really his strength just how well he executed on the marketing side of things.

Joe: And what do you think the weaknesses of the business were in the months ahead of you taking it over or the 12 months ahead of you taking over?

Raj: Yeah so what I kind of look the weakness is we’re really just cleaning up the logistics of the business. I saw that there was a lot of money kind of left on the table in terms of the cost of goods was way too much when I was looking at the business and that’s when I was already in talks with my own suppliers and everything figuring out like hey we can drastically reduce the price and t explode the bottom line really and get this business; make it extremely profitable from what it is. That was kind of the icing on the cake because I was able to; as you know with this business when we look at the numbers it was kind of like you had to kind of dig deep to figure out where everything exactly was. And by doing that and like you said reading the offering material I was able to figure out like if I clean up the logistics I will easily make this business extremely more profitable than it was.

Joe: So you worked with a manufacturer to modify; did you modify the product or just found a manufacturer cheaper, less expensive, same quality?

Raj: Manufacturer cheaper, same quality, I haven’t even; I’m considering modifying it a little bit but the price point I have without changing anything I just knocked up 80% of the value which is crazy. I mean everything that happened off the product…

Joe: Percent of the cost of goods sold?

Raj: Cost of goods sold off of the product. 

Joe: Can you put that into dollars?

Raj: Sure. Right now I’m paying; how much the cost of goods is right now?

Joe: Don’t talk about how much you’re paying, how much did; well I guess people will figure out the math here and we have to…if you tell me edit after this I’ll edit and if you’re all hearing me say the word edit then we chose not to. What I’m trying to figure out is a lot of people think about how to drive more revenue and you’ve got a unique approach which is how do we actually maximize the bottom line? I know now that I’m an entrepreneur buyer that the value of this business is a multiple of the trailing 12 months; the discretionary earnings. So did you save $2 a unit times 100 units a month that you’re selling or what kind of immediate boost do you see to the bottom line inaudible[00:20:25.5] negotiations?

Raj: I’ve saved say $6 a unit.

Joe: Holy cow. 

Raj: Yeah. 

Joe: Holy cow. That’s tremendous.

Raj: And it wasn’t just the cost of goods it was also the method of shipping; that was a big deal.

Joe: That’s right. You’ve got the capital to do freight versus doing just in time airship inaudible[00:20:44.2] right?

Raj: I had the cash flow to lock up for a month or 2; that’s okay with me but when I can take that much off the bottom line that’s definitely winning.

Joe: That’s amazing. What are you doing to boost the top line? You just said most people focus on the top line instead of the bottom you’re doing the smart thing but now tell me what you’re doing for the top line?

Raj: Sales fix everything at the end of the day; sales fix everything. You know the logistics thing the reason I started with that first was that was a quick fix. That’s something that you could do instantly. Improving the top line, now that might require a little bit of money, a little bit of tweaking, some marketing, and what we’ve done with that is really expanding and being aggressive with opening up in all different marketplaces; Canada, Australia, UK, Germany. I just kind of hit the ground running with those in the works of launching in all those different countries.

Joe: Really?

Raj: That’s what we’re working on now and sending inventory over there figuring out the VAT stuff and all that stuff I’ve done before is just kind of even as we talk some country is only going to see maybe 5 to 10% increase in sales but it’s still 5 to 10%. It still adds to the bottom line and still, you’re leaving money still on the table and you don’t want to do that and so that’s what we’ve been focusing on right now.

Joe: And how did you choose those countries just out of curiosity? What kind of research did you do or is it just countries that you’re comfortable with and you’ve done it before?

Raj: I’ve done it before and as well as I did a little research on the European ones because as you know it’s a little expensive to open up the VAT and all that stuff if you’re not choosing but working with other sellers and the experience I know kind of what countries do really well. If you have a North America Amazon plan you can easily open up in Mexico and Canada within like an hour. It’s not anything. The listings get sent over and it’s not a lengthy process. I just had to send the inventory.

Joe: Did you have to translate the Mexico ads and everything?

Raj: Oh yeah, you have to translate it. They have the translator on there and then you had to run through each of the listings as well because even when they get sent over the listings get converted they don’t end up being right anyway so you kind of have to inaudible[00:22:52.8] anyway.

Joe: I got you. Okay, maybe we can do an update in a year to talk about how those international markets went and what kind of additional revenue it was driving. Let’s talk about how you’ve learned to do what you’ve accomplished here. Are you tuning into podcasts, did you go through any training programs, what is the source of your experience; who do you listen to, what do you read that kind of thing?

Raj: I’m kind of a simple guy in the sense that I really listen to what Amazon puts out there too. They haven’t tons of seller university information which is great but when I started watching YouTube videos here and there kind of helps. I never paid for a course or anything like that because I kind of learn by trial and error. I don’t think you need a course per se but you’re going to make a lot more mistakes if you don’t have a clear path to follow. There’s a lot of information. I would say it’s not really too useful for people or kind of misleading out there too. So it’s kind of hard to find. But using Amazon’s material and just going to trial and error. I’d say your first product is not going to always work. And I think people are under the impression that if they buy a course and they do this that this is a home run; it’s not like that. It’s trial and error really.

Joe: Okay, so you’re doing your own research; watching, reading Amazon stuff and what they put out versus paying for courses and programs and going to events and things of that nature. I just had a call this morning with somebody that is like Nick he’s 12 months after selling his own business and one of the big reasons he sold was he felt isolated. It was growing and there was risk but he felt isolated and alone. And he did the same thing. He didn’t have a Mastermind group or anything like that. How do you overcome that? Do you have friends and colleagues that are also Amazon sellers that you talk with? How does that work in your life?

Raj: I’m in contact with a ton of people that we talk almost every day about what we’re doing and say oh you know international sellers and see how they’re getting what they’re doing on Amazon. So they are mass; I’m not part of a thousand, 2,000 group mastermind group but I am part of groups where big power sellers kind of talk to each other and figure out what’s going, what’s working, these new changes Amazon’s made. So we do talk about that every other day. 

Joe: Okay, and how many hours a week are you putting in on Amazon altogether or Beard King all together?

Raj: Beard King?

Joe: Sure.

Raj: Beard King by itself I would say I’m putting in about 15 hours right now.

Joe: A week?

Raj: Yeah. 

Joe: And you’re making more money than most people make when they do graduate from law school. I think you’ve chosen the right path here.

Raj: Yeah I think I’m onto something for a while now so I’m happy with the outcome and grateful for everything.

Joe: Well look, you did the work, you took the risk, you were in school and focused on building your own businesses as well. You studied up. You took the risk. You worked hard. The harder you worked the luckier you got. And here you are today buying a business with something very rare; a great IP and whole lot of protection with a lot of growth potential ahead of it. It’s growing in the bottom line which is fantastic the way that you’re renegotiated cost of goods sold and shipping. I’m excited to hear what it does over the next 6 to 12 months for the expansion to the other countries and some other focus.

Raj: Q4 is coming up and we’re super excited it’s about; we’re already up all across the board in revenues and it’s just about to take off now so it’s in the interesting lap in the next couple of months.

Joe: That’s great. Let’s get every man in America growing a beard and using the Beard King products.

Raj: That’s the dream. 

Joe: You’ve got to do it too though you’ve got to grow that beard.

Raj: Yeah I’m going to try. It’s a patchy beard but I’ll work on it.

Joe: For anybody that does get over to the Quiet Light YouTube channel. I think it’s Quiet Light Academy now. You’ve got to take a look at Nick’s beard versus Raj’s beard and my beard. You and I Raj are pretty pathetic. We don’t have much to go on at all. 

Raj: Nick got a crazy beard though. 

Joe: Absolutely. Well, listen it’s been great. I appreciate you sharing your story. What you’ve accomplished is pretty damn impressive and I’m excited to hear what happens over the next 12 months. How can people learn about what you’re doing or reach out to you?

Raj: Well you can find me on YouTube at Raj Patel and I’m going to be pretty much talking about everything from selling on Amazon to how to launch your product as well as just telling stories of what I’ve done over the last year that’s worked for me and putting some information out there that people can use in whatever they’re trying to accomplish by selling online and to learn sort of what I’ve done and help them out pretty much. So you can check me out at Raj Patel on YouTube.

Joe: Alright and everybody watching we’ll be expecting you to grow a beard as well or at least have a fake one on now and then Raj  Patel at

Raj: Yeah, inaudible[00:27:43.3] progress made.

Joe: Alright, perfect. All right man thanks for your time today. I appreciate it. 

Raj: No problem, thank you, Joe. 

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